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GBP18.88
▲ 108.00 (6.07%)
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GBP572m
Avon’s Q1 trading update, released to coincide with the AGM, indicates that expected positive momentum into FY20 from FY19 has continued through Q120. The news is particularly positive for milkrite | InterPuls, which had a very weak Q119. Double-digit increases in order intake in both divisions suggest H120 should see a significant improvement, notwithstanding the withdrawal from the Fire self-contained breathing apparatus (SCBA) market. The initial consolidation of the Helmets and Armor activity should also bolster performance, although there will be integration charges. We maintain our forecasts and are encouraged by the progress being displayed in the continuing activities.
Written by
Avon Rubber |
Good progress in Q120 |
AGM/Q1 trading update |
Aerospace & defence |
31 January 2020 |
Share price performance
Business description
Analyst
Avon Rubber is a research client of Edison Investment Research Limited |
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Avon’s Q1 trading update, released to coincide with the AGM, indicates that expected positive momentum into FY20 from FY19 has continued through Q120. The news is particularly positive for milkrite | InterPuls, which had a very weak Q119. Double-digit increases in order intake in both divisions suggest H120 should see a significant improvement, notwithstanding the withdrawal from the Fire self-contained breathing apparatus (SCBA) market. The initial consolidation of the Helmets and Armor activity should also bolster performance, although there will be integration charges. We maintain our forecasts and are encouraged by the progress being displayed in the continuing activities.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
09/18 |
165.5 |
27.2 |
76.6 |
16.0 |
33.1 |
0.6 |
09/19 |
179.3 |
31.4 |
90.9 |
20.8 |
27.9 |
0.8 |
09/20e |
233.0 |
35.4 |
93.1 |
27.1 |
27.2 |
1.1 |
09/21e |
256.4 |
43.6 |
114.7 |
35.2 |
22.1 |
1.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
In Q120, Avon Protection achieved a 12% constant currency increase in order intake, and further supply orders for the M53A1 and M69 systems are expected against the US DOD multi-year contracts during Q220. The strength of the Military activity in the US is more than offsetting the absence of Fire SCBA sales and lower sustainment volumes for the M50 mask systems. The order pipeline for the Rest of the World Military and First Responder also remains strong. The newly acquired Helmets and Armour business is consolidated from the start of January and management expectations for the current year are being met. The acquisition is expected to be significantly EPS enhancing in FY21 and to be creating value.
The dairy market trading conditions and resultant performance of milkrite | InterPuls are in stark contrast to a year ago. More profitable and confident farmers due to rising milk prices and stable feed prices has led to a 10% increase in order intake at constant currency. The improvement has supported strong trading across all three lines of activity and market conditions remain favourable at present.
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Research: TMT
discoverIE saw continued good trading momentum in Q320, with group revenue growth of 3% y-o-y (9M20 +7% y-o-y). Strong organic growth in the Design & Manufacturing (D&M) business, particularly in its target markets, was offset by temporary destocking issues in Custom Supply (CS). CS orders have rebounded in January and the company maintains its earnings expectations for FY20; we maintain our forecasts.